1. What is the informed consent requirement?

If you are an AFS licensee or representative that receives monetary benefits (e.g. commissions) in connection with issuing or selling general insurance, certain life insurance (see Question 2) or consumer credit insurance to a client while providing, or being likely to provide, personal advice to that client, you must:

• obtain the client’s informed consent to receive the benefit before the insurance is issued or sold
• have the client’s written consent (or a copy of it), or a written record of any verbal consent that the client gave, and
• as soon as practicable after the client provided informed consent, give the client a copy of the written consent, or a copy of the written record of the client’s verbal consent: see section 963BB(1).

For exemptions from the informed consent requirement, see Question 3.

2. What insurance products are subject to the informed consent requirement?

The informed consent requirement applies in relation to monetary benefits given in connection with the issue or sale of:

• a general insurance product (as defined in section 9)
• life insurance that has the same benefit ratio for each year it continues (e.g. level commissions) or that meets requirements relating to commission caps and clawbacks in ASIC Corporations (Life Insurance Commissions) Instrument 2017/510 (see sections 963B(1)(b) and 963BA) (referred to in this information sheet as ‘life risk insurance’), and
• consumer credit insurance e.g. mortgage protection insurance, credit card insurance or personal loan insurance (as defined in the Insurance Contracts Act 1984).

Monetary benefits given in connection with the issue of group life insurance for members of a superannuation fund and insurance for a member of a default superannuation fund are conflicted remuneration: see section 963B(1)(b)(ii) and (2).

3. When does the informed consent requirement not apply?

Table 1 sets out circumstances in which AFS licensees and representatives do not have to meet the informed consent requirement.

Table 1: Circumstances where the informed consent requirement does not apply

4. What are the consequences of being paid a monetary benefit without obtaining informed consent from your client?

If you are paid a monetary benefit without obtaining informed consent from your client, the monetary benefit you receive will breach the ban on conflicted remuneration. The consequences of breaching this ban could include a civil penalty, a banning order, or AFS licence suspension or cancellation: see the list in Table 2 of Regulatory Guide 246 Conflicted and other banned remuneration (RG 246).

5. What information must be disclosed to the client before they provide informed consent?

Before a client can provide informed consent, you must disclose the following information to them:

• the name of the insurer under the relevant product if known
• the rate of the monetary benefit that you will receive:
  • expressed as a percentage range of the policy cost for general insurance (e.g. 10–20% of the premium), or
  • expressed as a percentage of the policy cost payable for life risk insurance and consumer credit insurance
• the frequency with which you will receive the monetary benefit, and the period over which the benefits covered by the consent could be given (if more than one monetary benefit will be given in connection with the issue or sale)
• the nature of the services that you will provide to the client in relation to the relevant product (if any)
• a statement that it is a requirement of the law that the client’s consent must be obtained before the payment of an insurance commission, and
• a statement that the client’s consent, once provided, is irrevocable: see section 963BB(1)(c).

The law provides that this information does not need to be disclosed if it has already been disclosed to the client: see section 963BB(2)(a). For example, there is no need to separately disclose information that has been disclosed in a Statement of Advice (SOA).

If, after a client has provided consent, the rate or frequency of monetary benefit that you will receive is reduced, the client is taken to have consented to that lesser rate or benefit: see section 963BB(2)(b).

6. How should information be disclosed to a client?

ASIC expects information disclosed to clients to be worded and presented in a clear, concise and effective manner.

When presenting the information, to promote understanding, the rate of monetary benefit should be in a font that is at least the same font size as that predominantly used for other text in the information (e.g. the same font size as the font size of other information in the SOA).

We consider it is best practice to clearly identify the information as information that clients should consider in determining whether to provide consent. This accords with the objective, as stated in paragraph 1.290 of the Revised Explanatory Memorandum (PDF 1.17 MB)  to the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Bill 2024 (DBFO Bill), to provide ‘a genuine and real opportunity for the consumer to make an informed decision before deciding to be issued or sold a certain insurance product’.

Clients are not considered to have had a ‘genuine and real opportunity’ to make an informed decision if the information is not clearly identifiable as information being disclosed to the client to assist them decide whether to be issued or sold the relevant insurance. This is because such information would not prominently and clearly bring to the client’s attention the consent being sought.

While the law provides that information does not need to be disclosed if it has already been disclosed (e.g. in an SOA), this is tempered by the need for clients to make an informed decision.

7. Do I need to meet the informed consent requirement again when an insurance product is renewed?

You do not need to obtain a new client consent to be given a monetary benefit in connection with renewal of an insurance product if:

• the information disclosed to the client before they agreed to be issued or sold that product:
  • is otherwise unchanged at the renewal
  • for life risk insurance and consumer credit insurance – included the expected renewal period(s) as part of the period over which monetary benefits covered by the consent could be given, and
  • for general insurance – included the fact that the client’s consent will cover renewals of the general insurance product, and
• the rate or frequency of monetary benefit received after renewal (renewal benefit) is less than the rate or frequency of monetary benefit disclosed to the client before they provided informed consent.

If the rate of renewal benefit of an insurance product is higher than the rate of monetary benefit previously disclosed to the client, or you propose to increase the frequency of monetary benefit, you will need to obtain new consent from the client: see section 963BB(2)(b) and (3)(b). You may do this by seeking new informed consent from your client or by seeking the client’s consent to vary their original informed consent: see Question 8.

Note: You do not need to meet the informed consent requirement if the renewal relates to a general insurance product that was first issued or sold before 10 July 2025: see section 1708E(2) and Question 3.

8. Can I seek client consent to vary the information disclosed to them?

You can seek client consent to vary the information disclosed to them: see Question 5.

Specifically, you may seek client consent to vary the name of the insurer (e.g. due to a merger), the rate and/or frequency of the monetary benefit, or the nature of services provided to the client in relation to the product.

Your client cannot consent to vary the requirement for the informed consent to state that informed consent is a requirement of the law and that the consent is irrevocable. Additionally, as part of the consent to vary information, your client cannot consent to monetary benefits that you will receive in connection with the issue or sale of insurance that is new or that has been varied.

If you want to vary the insurance that was issued or sold to the client or issue new insurance, including in response to a request from the client, you will need to meet the informed consent requirement again for the new or varied insurance if you will receive monetary benefits, assuming that no exemption from the informed consent requirement applies: see Question 3. This includes providing updated disclosures as required: see Question 5.

For a variation of information disclosed to a client to be valid:

• the client must consent to the variation, which may be written or verbal
• you must keep the written consent (or a copy of it) or a written record of any verbal consent, and
• you must give the client a copy of their written consent, or a written record of their verbal consent, as soon as reasonably practicable after the consent: see section 963BB(6).

9. Can a client provide informed consent verbally?

A client can provide informed consent verbally if the remaining elements of the informed consent requirement are satisfied: see section 963BB.

If a client provides informed consent verbally, you must keep a written record of that consent and give a copy of it to the client as soon as reasonably practicable after you obtained the consent: see section 963BB(1)(e).

10. Do I need to give a copy of a client’s informed consent to the insurance product issuer?

There is no explicit provision to give insurance product issuers a client’s informed consent in the Corporations Act and product issuers are not deemed to have given conflicted remuneration if an AFS licensee or representative has failed to meet the informed consent requirement: see section 963K(2).

However, the insurance product issuer may wish to ask for a copy of the client’s informed consent, or agree that this is done as part of their compliance or risk mitigation strategies, as product issuers (and sellers) must not give AFS licensees and representatives conflicted remuneration: see section 963K(1). It is also possible for an insurance product issuer to include the request for informed consent as part of the product application process.

If a product issuer takes this approach, they would need to meet our expectations for how information is disclosed to clients: see Question 6. They would also need to have a process to give the written consent (or a copy of it), or a written record of any verbal consent from the client, to the relevant AFS licensee and representative.

This is because the AFS licensee or representative must have the client’s informed consent for the informed consent requirement to be met. To meet this requirement, the AFS licensee or representative must also give the client a copy of the written consent, or a copy of the written record of any verbal consent, as soon as practicable after the client has consented: see section 963BB(1)(e).

11. Do I need to obtain new informed consent if I acquire all or part of an advice business?

You do not need to obtain new informed consent to receive a monetary benefit if the client provided informed consent to monetary benefits being given to the AFS licensee or representative that sold or transferred all or part of the advice business dealing with the client’s insurance, including a book of clients, to you: see section 963BB(4).

12. What records need to be kept?

As an AFS licensee, you should ensure that you and your representative(s) keep records to demonstrate compliance with the informed consent requirement.

You must keep the following records for at least 5 years:

• a copy of the information disclosed to a client before that client provided consent
• a copy of any variations to information disclosed to a client that the client has consented to and evidence of the client’s consent
• each written consent (or a copy of it) that a client provides and its date
• each written record of a client’s verbal consent (or a copy of the written record of any verbal consent) and its date, and
• a record of the date the client was given a copy of the written consent (or a copy of the written record of any verbal consent) and supporting evidence: see section 1101C(3).

A formal written agreement or an email recording a client’s verbal consent is sufficient written record of it for this purpose: see paragraph 1.297 of the Revised Explanatory Memorandum (PDF 1.17 MB) to the DBFO Bill.

We consider these record keeping responsibilities are part of conduct required by financial advisers under Standard 8 of the Financial Planners and Advisers Code of Ethics 2019. They are also part of the duty that AFS licensees have to:

• ‘do all things necessary to ensure that the financial services covered by the licence are provided efficiently, honestly and fairly’ (see section 912A(1)(a)), and
• have an adequate dispute resolution system (see section 912A(1)(g)).

Licensees should also keep or have access to records kept by their representative(s) so they can monitor compliance with the informed consent requirement: see section 912A(1)(ca).